In this article, we discuss 10 best Fortune 500 stocks to buy now.
The Fortune 500 list consists of the largest public and private companies from the United States, ranked by annual revenues, compiled by Fortune Magazine every year. Walmart Inc. (NYSE:WMT) has consistently ranked as the top Fortune 500 company for 8 years in a row, followed by Amazon.com, Inc. (NASDAQ:AMZN).
The Fortune 500 companies contribute to about one-third of the world’s gross domestic product. Although, in 2021, owing to the global lockdowns, supply chain disruptions, shortage of labor, demand contraction, and ever changing government mandates regarding businesses, the Fortune 500 companies’ collective revenue dropped by roughly 5% to $31.7 trillion. Similarly, the combined profit of the Fortune 500 members equaled $1.6 billion, down by 20% as compared to 2020.
However, the Fortune 500 list consists mostly of legacy names who were able to combat the COVID-19 headwinds and survive the financial distress that caused many smaller companies to shut down. Even though the economic outlook remains uncertain due to the Omicron variant of COVID-19, the Fortune 500 companies are solid investments since their strong cash flow, adoption of online retail, and solid market footprint enables them to navigate financial and economic downturns.
The most popular Fortune 500 companies include Apple Inc. (NASDAQ:AAPL), Amazon.com, Inc. (NASDAQ:AMZN), and Microsoft Corporation (NASDAQ:MSFT).
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Our Methodology
We selected the Fortune 500 companies that had strong fundamentals, growth prospects heading into 2022, and positive analyst ratings. We ranked the list according to the hedge fund sentiment surrounding the holdings.
Best Fortune 500 Stocks to Buy Now
10. Costco Wholesale Corporation (NASDAQ:COST)
Number of Hedge Fund Holders: 55
Costco Wholesale Corporation (NASDAQ:COST) is an American multinational retail chain, offering food, home appliances, electronics, and fashion accessories. Some Costco Wholesale Corporation (NASDAQ:COST) warehouses have gas stations and pharmacies, optometrists, and car garages as well.
On December 14, Argus analyst Chris Graja raised the price target on Costco Wholesale Corporation (NASDAQ:COST) to $610 from $515 and kept a Buy rating on the shares, citing the Q1 2022 earnings beat. The analyst stated that he remains “very bullish” on Costco Wholesale Corporation (NASDAQ:COST) as the stock has fared well even during severe market turbulence.
Fisher Asset Management is the largest Costco Wholesale Corporation (NASDAQ:COST) stakeholder as of Q3 2021, with 3.8 million shares worth $1.74 billion. Overall, 55 hedge funds reported owning stakes worth $4.39 billion in Costco Wholesale Corporation (NASDAQ:COST) in the third quarter.
In addition to Apple Inc. (NASDAQ:AAPL), Amazon.com, Inc. (NASDAQ:AMZN), and Microsoft Corporation (NASDAQ:MSFT), Costco Wholesale Corporation (NASDAQ:COST) is one of the best Fortune 500 stocks to buy now.
Here is what Saturna Capital Sextant Funds has to say about Costco Wholesale Corporation (NASDAQ:COST) in its Q3 2021 investor letter:
“Costco had a rocky start to the year as the vaccine rollout perhaps convinced investors that shopping habits might normalize. Instead, the spread of the Delta variant, combined with contributions from the millions of new members Costco attracted since the beginning of the pandemic, have powered the business and the share price forward since early March.”
9. CVS Health Corporation (NYSE:CVS)
Number of Hedge Fund Holders: 61
CVS Health Corporation (NYSE:CVS) is an American healthcare corporation that owns a number of pharmacies and clinics, including CVS Pharmacy, MinuteClinic, Omnicare, and CVS Caremark, among others. Believing the company’s ongoing growth initiatives and its primary care focus strategy will drive long-term shareholder value creation, Tigress Financial analyst Ivan Feinseth on December 23 raised the price target on CVS Health Corporation (NYSE:CVS) to $122 from $108 and reiterated a Buy rating on the shares.
Harris Associates, one of the top Wall Street hedge funds, was bullish on CVS Health Corporation (NYSE:CVS) during the third quarter, holding more than 8 million shares worth approximately $686 million. Overall, 61 hedge funds in the third quarter database of Insider Monkey were long CVS Health Corporation (NYSE:CVS), down from 67 funds in the preceding quarter.
Publishing its Q3 results on November 3, CVS Health Corporation (NYSE:CVS) announced an EPS of $1.97, beating estimates by $0.18. The $73.79 billion revenue over the period jumped 10.05% year-over-year, exceeding estimates by $3.27 billion.
Here is what ClearBridge Investments has to say about CVS Health Corporation (NYSE:CVS) in its Q2 2021 investor letter:
“Our differentiated positions in the health care sector also made strong contributions as the market began to reward the heavily discounted sector. CVS Health Corporation (NYSE:CVS) saw strength in its pharmacy benefits manager business as well as its managed care business, Aetna, helping to confirm our positive view of CVS’s repositioning of its business model from a dispensary model to a service model. With CVS Health Corporation (NYSE:CVS) store-based health care services offering patients better convenience, encouraging better health care compliance and ultimately lower costs, we believe the company is at the forefront of a changing mindset in the health care services sector.”
8. Exxon Mobil Corporation (NYSE:XOM)
Number of Hedge Fund Holders: 64
Exxon Mobil Corporation (NYSE:XOM), a Texas-based multinational oil and gas corporation, expects higher gasoline prices to elevate its earnings from $700 million in the third quarter to $1.1 billion in the fourth quarter. Exxon Mobil Corporation (NYSE:XOM)’s 5.75% dividend yield also makes it one of the best Fortune 500 stocks to diversify an income portfolio.
Exxon Mobil Corporation (NYSE:XOM) has partnered with Scepter, Inc. to deploy advanced satellite technology and proprietary data processing platforms to detect methane emissions at a global scale, which will reduce emissions from multiple industries including energy, agriculture, manufacturing, and transportation.
Of the 64 hedge funds that were bullish on Exxon Mobil Corporation (NYSE:XOM) in the third quarter, GQG Partners is the largest company stakeholder, with 26.5 million shares worth $1.56 billion.
Here is what Goehring & Rozencwajg Associates has to say about Exxon Mobil Corporation (NYSE:XOM) in its Q3 2021 investor letter:
“After successfully replacing 25% of Exxon’s board of directors despite owning just 0.02% of the outstanding equity, Engine No. 1, the climate-focused activist hedge fund, met with Chevron’s management late last summer. In discussions that were later described as “cordial,” Chevron executives shared their plan to reduce carbon emissions. Subsequently, Chevron announced new plans to further reduce carbon output, along with their intention to appoint a new director with “environmental expertise.” Although it remains unclear exactly what Engine No. 1 is planning, rumors suggest the fund has contacted other investors, strongly suggesting they intend to launch a second campaign in the not-too-distant future.
What should Chevron expect?
It was recently reported by The Wall Street Journal that Exxon was considering abandoning two massive natural gas projects: the 75 trillion cubic foot (tcf ) Rovuma LNG project (capital cost $30 bn) and the 5 tcf Ca Voi Xanh offshore-Vietnam gas project (capital cost $10 bn). Exxon board members (most likely including the three supported by Engine No. 1) have publicly expressed concerns about both projects.
According to internal reports, these projects are among the highest CO2 producers in Exxon’s pipeline; it is no surprise these projects have been called into question. However, we find the plight of both fields to be perplexing since production would almost certainly be used to displace coal in electricity generation, cutting CO2 emissions by nearly 50%. This fact seems to be lost on the new Exxon board members.”
7. Walmart Inc. (NYSE:WMT)
Number of Hedge Fund Holders: 71
A multinational retail corporation, offering discount stores, grocery stores, and hypermarkets, Walmart Inc. (NYSE:WMT) is one of the best Fortune 500 stocks to buy now. Walmart Inc. (NYSE:WMT) is benefiting from the reopening of the economy, and to meet rising e-commerce demand, the company announced on December 15 plans to build a new fulfillment center in Salt Lake City.
In the third quarter of 2021, 71 hedge funds were bullish on Walmart Inc. (NYSE:WMT), with stakes amounting to $7.93 billion. Bill & Melinda Gates Foundation Trust is one of the leading stakeholders of Walmart Inc. (NYSE:WMT), which increases investor confidence in the stock. The Gates’ fund holds 6.92 million Walmart Inc. (NYSE:WMT) shares, worth roughly $965 million.
MKM Partners analyst Bill Kirk on November 19 upgraded Walmart Inc. (NYSE:WMT) to Buy from Neutral with a price target of $166, up from $156. The analyst observed that relative to peers, Walmart Inc. (NYSE:WMT) had better inventory levels heading into the holiday and has shown the best progress toward building a subscription model.
6. UnitedHealth Group Incorporated (NYSE:UNH)
Number of Hedge Fund Holders: 95
UnitedHealth Group Incorporated (NYSE:UNH) is an American multinational healthcare and insurance company.
On December 20, Mizuho analyst Ann Hynes raised the price target on UnitedHealth Group Incorporated (NYSE:UNH) to $550 from $500 and kept a Buy rating on the shares. According to the analyst, the managed care sector is set to outperform in 2022 owing to increased earnings visibility, reduced legislative risk, an improved economic backdrop, and less exposure to supply chain and other inflationary risks as opposed to other sectors.
Publishing its third quarter results on October 14, UnitedHealth Group Incorporated (NYSE:UNH) posted earnings per share of $4.52, exceeding estimates by $0.10. Revenue over the period increased 11.09% from the prior-year quarter, totaling $72.34 billion, outperforming estimates by $1.05 billion.
In Q3 2021, 95 hedge funds were long UnitedHealth Group Incorporated (NYSE:UNH), with stakes totaling $11.7 billion. Boykin Curry’s Eagle Capital Management is one of the largest UnitedHealth Group Incorporated (NYSE:UNH) stakeholders, with over 3 million shares worth $1.20 billion.
In addition to Apple Inc. (NASDAQ:AAPL), Amazon.com, Inc. (NASDAQ:AMZN), and Microsoft Corporation (NASDAQ:MSFT), hedge funds are also piling into UnitedHealth Group Incorporated (NYSE:UNH).
Here is what Third Point Management has to say about UnitedHealth Group Incorporated (NYSE:UNH) in its Q3 2021 investor letter:
“UnitedHealth is one of the largest healthcare companies in the world and a market leader in both its insurance and healthcare services (Optum) businesses. We initiated our position during the 2020 Presidential election at a time of heightened political and regulatory uncertainty.
We believe under its new CEO, Andrew Witty, UnitedHealth Group Incorporated (NYSE:UNH) can not only preserve its market dominance and sustain industry-leading growth rates across most of its key segments but also enter new healthcare services markets. Witty is known as a mission-driven CEO who clearly articulates his view that providing high-quality, affordable health care services is a social good. He receives consistently high marks from former colleagues, and we believe that his leadership approach will ballast and even strengthen UNH’s already impressive management and employee ranks. The insurance and services businesses are synergistic and complementary, which entrenches UnitedHealth Group Incorporated (NYSE:UNH)’s critical role in care financing, access, and management. This dynamic gives us confidence in the durability of United’s market leadership…” (Click here to see the full text)
5. JPMorgan Chase & Co. (NYSE:JPM)
Number of Hedge Fund Holders: 101
JPMorgan Chase & Co. (NYSE:JPM) is a New York-based investment bank and multinational financial services corporation that is a top ranked Fortune 500 company. JPMorgan Chase & Co. (NYSE:JPM) recently joined Trumid’s fixed income platform, which will allow the company to directly offer liquidity to its institutional client base. Trumid is an up and coming financial institution offering a digital credit trading network.
UBS analyst Erika Najarian on December 19 initiated coverage of JPMorgan Chase & Co. (NYSE:JPM) with a Buy rating and a $210 price target. According to the analyst, the stock’s “rare” year-to-date price underperformance relative to peers presents investors with a “compelling opportunity”, and believes that concerns over capital constraints affecting JPMorgan Chase & Co. (NYSE:JPM)’s best-in-class revenue power are “overblown.”
Phill Gross and Robert Atchinson’s Adage Capital Management is one of the largest JPMorgan Chase & Co. (NYSE:JPM) stakeholders from the third quarter, with almost 3 million shares worth $489.8 million. Overall, 101 hedge funds were long JPMorgan Chase & Co. (NYSE:JPM) in Q3, down from 108 funds in the prior quarter.
Vltava Fund mentioned JPMorgan Chase & Co. (NYSE:JPM) in its Q3 2021 investor letter. Here is what the fund said:
“While all the previous names could be categorized as founder, continuing, or key shareholders, these last two names fall into the category of hired professional managers. This is actually the most numerous category among the bosses of large companies, but even among them there exist a number of individuals with exceptional long-term track records. In our view, these include also Jamie Dimon and Herman Gref.
We consider JP Morgan to be the strongest, largest, and most profitable bank in the world. It has not always been so, and the fact that it is what it is today can be attributed especially to its CEO Jamie Dimon. Dimon has spent his entire career in banking. He came to JP Morgan in a roundabout way in 2004 after the bank bought Bank One, of which he was CEO at the time. Since early 2006, Dimon has been CEO of the entire JP Morgan.
The quality and strength of JP Morgan under his leadership became fully apparent for the first time in 2008. Not only did JP Morgan help to stabilise the market by taking over the failing Bear Stearns in the spring of that year, but it was the only major US bank that did not require government assistance throughout the Great Financial Crisis and that was highly profitable even in the difficult year of 2008. Today, JP Morgan is even bigger, even more profitable, and even stronger than ever before. Many investors view banks with disdain, but a good bank with good management can be a very good long-term investment. From the time of its merger with Bank One in 2004 through the end of 2020, JP Morgan’s stock has outperformed even the S&P 500 index. The bank has earned a total net profit of USD 330 billion during this period, of which USD 232 billion has been paid out to shareholders in dividends and in share buybacks. I can recommend two books about Jamie Dimon: The House of Dimon and Last Man Standing.”
4. Apple Inc. (NASDAQ:AAPL)
Number of Hedge Fund Holders: 120
Apple Inc. (NASDAQ:AAPL) is one of the Big Five US tech giants that is well on its way to reach a $3 trillion valuation, making it one of the best Fortune 500 stocks to buy now. To fend off competitors stealing away its top talent, Apple Inc. (NASDAQ:AAPL) recently gave 10% to 20% of its engineering professionals stock bonuses of up to $180,000.
Apple Inc. (NASDAQ:AAPL)’s move away from Intel Corporation (NASDAQ:INTC) in 2020 raised questions about the company’s ability to power its MacBooks and iMacs, but the launch of the Apple M1 chip in 2020 was thoroughly successful, allowing longer battery life and a fanless design that made the machines quieter. Apple Inc. (NASDAQ:AAPL)’s Q2 Mac revenue increased 70.1% due to the M1 chip.
Morgan Stanley analyst Katy Huberty on December 22 observed that major end markets like China are posting high iPhone shipment growth, and she believes that iPhone production is “surprising to the upside.” She kept an Overweight rating and a $200 price target on Apple Inc. (NASDAQ:AAPL) shares.
Among the hedge funds being tracked by Insider Monkey, Berkshire Hathaway is the biggest Apple Inc. (NASDAQ:AAPL) stakeholder, with a $125.5 billion position in the company during the third quarter. Overall, 120 hedge funds held stakes in Apple Inc. (NASDAQ:AAPL) in Q3 2021, down from 138 funds in the prior quarter.
Here is what ClearBridge Investments has to say about Apple Inc. (NASDAQ:AAPL) in its Q1 2021 investor letter:
“As we actively manage holdings and position sizes, we look to regularly recycle capital into more compelling opportunities. Maintaining our valuation discipline, we sharply reduced our position in Apple, whose shares more than doubled following our initial purchase in mid-2019 with an earnings multiple rising from the low-to-mid teens to nearly 30x.”
3. Alphabet Inc. (NASDAQ:GOOG)
Number of Hedge Fund Holders: 156
Alphabet Inc. (NASDAQ:GOOG), a US multinational tech conglomerate that is the parent company of Google and Google subsidiaries, surged approximately 67% in 2021, and helped collectively add more than $2.45 trillion in market valuation, in addition to the other Big Five US tech firms.
Tigress Financial analyst Ivan Feinseth on December 3 raised the price target on Alphabet Inc. (NASDAQ:GOOG) to $3,540 from $3,185 and reiterated a Strong Buy rating on the shares, citing the company’s increasing artificial intelligence-first focus improving product functionality and “significant” growth opportunities.
TCI Fund Management, an approximately $42 billion value-based hedge fund managed by British billionaire Chris Hohn, is the largest Alphabet Inc. (NASDAQ:GOOG) stakeholder as of Q3 2021, holding 2.95 million shares of the company, worth $7.86 billion. Overall, 156 funds were bullish on the stock in the third quarter.
Here is what Saturna Capital Amana Funds has to say about Alphabet Inc. (NASDAQ:GOOG) in its Q3 2021 investor letter:
“Alphabet was a new addition to the Fund this year, as we believed it important to have exposure to the top online media and advertising company in the world. Some have raised concerns surrounding Alphabet’s exposure to political interference, but we take comfort from the belief that were the company to be broken up, it would quite likely be worth even more than as a single entity.”
2. Amazon.com, Inc. (NASDAQ:AMZN)
Number of Hedge Fund Holders: 242
Jeff Bezos’ Amazon.com, Inc. (NASDAQ:AMZN) is an American ecommerce, artificial intelligence, and cloud services provider that has had major economic influence globally. Amazon.com, Inc. (NASDAQ:AMZN) is one of the top legacy tech picks for 2022 at Baird, in addition to Meta Platforms, Inc. (NASDAQ:FB).
Monness Crespi analyst Brian White noted that Amazon.com, Inc. (NASDAQ:AMZN)’s AWS now has 84 availability zones across 26 geographic regions and offers over 200 fully featured services to millions of customers, which means “the company’s fortunes are poised to change in 2022.” The analyst kept a Buy rating and a $4,500 price target on Amazon.com, Inc. (NASDAQ:AMZN) shares on December 27.
Amazon.com, Inc. (NASDAQ:AMZN) is one of the most popular stocks among the smart money, with 242 hedge funds in Q3 holding stakes worth $42.5 billion in the company. One of the leading Amazon.com, Inc. (NASDAQ:AMZN) stakeholders is Tiger Global Management, with the fund owning a $1.86 billion position in the tech giant.
Here is what Davis Opportunity Fund has to say about Amazon.com, Inc. (NASDAQ:AMZN) in its Q3 2021 investor letter:
“E-commerce, online search and advertising, social media and software are another component of the portfolio that have proven, attractive businesses. The online portion of the Fund is currently dominated by such market leaders as Amazon.com. We are attracted to these names based on the size and rapid expansion of their market opportunities globally, their ability to generate and grow new revenue sources through constant innovation, ample operating leverage as they continue to scale and capable, focused, highly competitive leadership teams. If purchased at sensible prices, these types of businesses in our experience can contribute meaningfully to long-term results.”
1. Microsoft Corporation (NASDAQ:MSFT)
Number of Hedge Fund Holders: 250
Microsoft Corporation (NASDAQ:MSFT) is one of the most popular Fortune 500 stocks to buy now, with 250 hedge funds in the third quarter database of Insider Monkey holding stakes in the tech corporation, amounting to $65.8 billion. Billionaire Ken Fisher’s Fisher Asset Management is the leading Microsoft Corporation (NASDAQ:MSFT) shareholder as of September 2021, with its stake in the company exceeding $7 billion.
SMBC Nikko analyst Steve Koenig on December 21 initiated coverage of Microsoft Corporation (NASDAQ:MSFT) with an Outperform rating and a $410 price target, which represents about 28% upside from current levels. The analyst observed that Microsoft Corporation (NASDAQ:MSFT) is successfully transitioning its customers to the cloud and is “well positioned at the center of the big secular trends in software”.
Here is what Baron Opportunity Fund has to say about Microsoft Corporation (NASDAQ:MSFT) in its Q3 2021 investor letter:
“Shares of Microsoft Corporation, a cloud-software leader and provider of software productivity tools and infrastructure, rose during the quarter following a strong earnings report highlighting solid demand for its broad product stack and continued momentum migrating its business to the cloud. Microsoft’s results continued to be strong across the board, with total revenue beating Street estimates by 4.5%, an acceleration in Commercial Cloud revenue to 31% constant-currency growth, a four-point improvement in Commercial Cloud gross margins (to 70% from 66%), and GAAP earnings up 42%. We believe the company is positioned to deliver 13% to 15% organic growth over the next three years, underpinned by TAM expansion across its disruptive cloud product portfolio, as more companies look to transform and digitize their businesses, as well as strong operating leverage as its cloud products gain scale.”
You can also take a look at 10 Best Tech Stocks to Buy Under $10 and 10 Best Growth Stocks for 2022.
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Disclosure: None. 10 Best Fortune 500 Stocks to Buy Now is originally published on Insider Monkey.
